Electric vehicle manufacturers are frustrated.
Despite their desire to produce more vehicles, their hands are tied as supply chain disruptions triggered by the Covid-19 pandemic persist. These are now exacerbated by the invasion of Ukraine by Russia, a major nickel exporting country.
Nickel, palladium and aluminum are important in the manufacture and assembly of electric vehicles.
They help make catalytic converters, air conditioner condensers, and other essential auto parts. Nickel is used to make stainless steel and batteries, which are at the heart of an electric vehicle, as they determine a car’s range and play a key role in vehicle performance and safety.
These factors thwart automakers’ desire to meet demand. This raised an unprecedented fact: the question is no longer whether consumers are interested in electric vehicles, but rather whether automakers can meet the demand.
Signals from the second-hand market reinforce this new dynamic.
“It changed a lot of people who were intrigued by electricity or somewhat interested in electricity but hadn’t made up their minds,” CoPilot CEO and Founder Pat Ryan told TheStreet. Copilot tracks prices at car dealerships nationwide.
“They’re going to come out of this crisis, electric buyers will come out of this crisis with a much larger market ready to buy electric vehicles,” Ryan said.
Demand is catching up
For Ryan, the Covid-19 pandemic and soaring gas prices have finally convinced many curious consumers to make the jump to electric vehicles.
“If you look at how much electricity was sold in the US market in 2001, it was a real question of whether we’re going to supply a lot more electricity than there was demand,” Ryan said. “Now I think the demand is starting to catch up with the supply.”
From Tesla (TSLA) – Get the Tesla Inc report at GM (GM) – Get the General Motors Company Report through Ford (F) – Get the Ford Motor Company reportvolkswagen (VLKAF) Rivian (BANK) – Get the Class A report from Rivian Automotive, Inc. or lucid group (LCID) – Get the report from Lucid Group, Inc., most automakers have well-filled order books. The problem is knowing when consumers will be able to have their vehicle delivered.
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A consumer who orders a GMC Hummer electric pickup today won’t see it delivered until 2024, a GM spokesperson says Recount TheStreet recently.
The EV Hummer pickup, an eco-friendly version of the iconic Hummer, is the second electric vehicle produced by GM. The Detroit giant has three electric vehicle models in production: the Hummer EV, the Cadillac Lyriq SUV and the Chevy Bolt EV/Bolt EUV.
At market leader Tesla, the wait is shorter to buy a car because Elon Musk’s group is in progress to operate four vehicle factories at the same time. But delivery times are still long. If you order the Model Y SUV today, one of Tesla’s best-selling vehicles, it will only delivered to you between October 2022 and January 2023.
Interestingly, strong demand is also occurring as manufacturers continue to raise prices to preserve margins in the face of soaring commodity prices. In other words, consumers do not seem put off by the high cost of electric vehicles.
An affluent and progressive clientele
The same trend is seen in the used-vehicle market, where Tesla models are in high demand and account for more than 55% of used electric vehicles available, according to CoPilot.
Used Tesla prices hit record highs of $66,000 as of March 27, up more than 8% over the past three weeks, according to CoPilot.
New used models – Teslas between one and three years old – peaked at an average of $72,101.
A days supply of used Teslas — how many days will it take to sell the inventory — fell to a record low of 18 days from 62 days in mid-February, Ryan said.
“Now you can’t buy a (Tesla) Model 3 for less than $50,000,” Ryan added. At this price, the used Model 3, Tesla’s entry-level sedan, seems to be almost the same price as a New a.
While high prices are good for Tesla and sellers of Tesla vehicles, they do not expand the customer base for electric vehicles. This clientele remains affluent, progressive, urban and suburban, according to CoPilot.
“These are usually people who are environmentally conscious and have a college education,” Ryan said. “So there is a real chance that we will find that electric vehicles will be more widely adopted in the luxury market.”
